Travelers 2011 Annual Report Download - page 49

The ultimate losses equal actual activity to date plus the expected
values for future periods.
Broker ................... One who negotiates contracts of insurance or reinsurance on behalf
of an insured party, receiving a commission from the insurer or
reinsurer for placement and other services rendered.
Capacity .................. The percentage of surplus, or the dollar amount of exposure, that
an insurer or reinsurer is willing or able to place at risk. Capacity
may apply to a single risk, a program, a line of business or an entire
book of business. Capacity may be constrained by legal restrictions,
corporate restrictions or indirect restrictions.
Captive .................. A closely-held insurance company whose primary purpose is to
provide insurance coverage to the company’s owners or their
affiliates.
Case-incurred development
method ................. A conventional actuarial method to estimate ultimate losses for a
given cohort of claims such as an accident year/product line
component. If the paid-to-date losses are then subtracted from the
estimated ultimate losses, the result is an indication of the unpaid
losses.
The approach is the same as that described in this glossary under
the ‘‘paid loss development method,’’ but based on the growth in
cumulative case-incurred losses (i.e., the sum of claim-adjustor
incurred estimates for claims in the cohort) rather than paid losses.
The basic premise of the method is that cumulative case incurred
losses for a given cohort of claims will grow in a stable, predictable
pattern from year-to-year, based on the age of the cohort.
Case reserves .............. Claim department estimates of anticipated future payments to be
made on each specific individual reported claim.
Casualty insurance .......... Insurance which is primarily concerned with the losses caused by
injuries to third persons, i.e., not the insured, and the legal liability
imposed on the insured resulting therefrom. It includes, but is not
limited to, employers’ liability, workers’ compensation, public
liability, automobile liability, personal liability and aviation liability
insurance. It excludes certain types of losses that by law or custom
are considered as being exclusively within the scope of other types
of insurance, such as fire or marine.
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